Case 3:15-cv EMC Document 163 Filed 03/19/18 Page 1 of 5 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

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1 Case :-cv-00-emc Document Filed 0// Page of UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA IN RE ENERGY RECOVERY INC. SECURITIES LITIGATION. Case No. -cv-00-emc ORDER RE LEAD PLAINTIFF S MOTION FOR DISBURSEMENT OF SETTLEMENT FUNDS Docket No. 0 The Court previously conditionally granted Lead Plaintiff s motion for disbursement of settlement funds. Having now received additional information from the claims administrator Garden City Group LLC ( GCG ), the Court hereby rules as follows. The Court adopts the proposed order submitted by Lead Plaintiff at Docket No. -, but with two modifications. First, as the Court previously indicated, a claimant shall have 0 days (not 0 days) to cash a check. See Prop. Order E. Second, the Court awards the claims administrator $,000 (instead of the requested $,0.). See Prop. Order L. With regard to the claims administrator fees and expenses, the Court notes as follows.. On February, 0 as a part of preliminary approval proceedings the Court ordered the parties to provide the actual dollar value of, inter alia, claim administration costs that would be deducted from the gross settlement fund. The Court acknowledged that some deductions will need to be estimated but the parties shall use their best efforts to provide a reasonably accurate estimate. Docket No. (Order B). The proposed order actually refers to a sum of $,., but, at the hearing held on March, 0, Lead Counsel admitted that this was an error. See also Ferrante Decl. (declaration submitted on behalf of GCG) (stating that GCG has billed a total of $,0. ).

2 Case :-cv-00-emc Document Filed 0// Page of 0. On March, 0, Lead Plaintiff responded as follows: GCG estimates that it will be able to administer the class action for between $,000 and $,000, including fees and expenses. This estimate is based upon the following key assumptions: 0,000 class members (notice recipients); a notice and proof of claim package totaling pages; an IVR telephone line for,000 minutes of operation (assuming % of class members at minutes/call); claims processing at 0% response rate (,000 claims); and a -month claims administration process. Docket No. (Supp. Br. at ). Lead Plaintiff added that a reminder notice to approximately 0,000 class members would increase claim administration costs by approximately $,000 to $,000. Docket No. (Supp. Br. at ). Thus, the maximum estimate was $,000 (i.e., $,000 + $,000).. At the time of the supplemental brief, Lead Plaintiff reiterated that notice would include not only mail notice but also publication notice in Investor s Business Daily. See Docket No. (Supp. Br. at ) (stating that, [w]ith regard to the publication in Investor s Business Daily, the notice will be published once at the outset of the notice period ); see also Docket No. (Mot. at ) (noting that settlement provides for publication of a summary notice... in the national edition of Investor s Business Daily ).. On April, 0, the Court granted preliminary approval. See Docket No. (order).. In conjunction with final approval proceedings, GCG submitted a declaration on August, 0, stating, inter alia, that: GCG disseminated, notice packets and, reminder postcards, see Docket No. - (Ferrante Decl. -); GCG received 0 calls (with respect to the toll-free phone line that was maintained), see Docket No. - (Ferrante Decl. ); and GCG received, proofs of claim. See Docket No. - (Ferrante Decl. ). Subsequently, on January, 0 (in conjunction with the pending motion), GCG revised the number of proofs of claim received to,0. See Docket No. (Ferrante Decl. 0).. On January, 0, GCG also provided information about the claims administration costs. GCG represented that its total fees and expenses were $,0.. See Docket No. (Ferrante Decl. ). GCG acknowledged that it was seeking more than had

3 Case :-cv-00-emc Document Filed 0// Page of previously been represented to the Court as a part of preliminary approval but asserted that there were several modifications to the scope of the administration that were not contemplated in our proposal and were beyond the scope of GCG s initial proposal. Docket No. (Ferrante Decl. ). According to GCG, these modifications were as follows: The size of the Proof of Claim Form was increased from four pages to ten pages. Docket No. (Ferrante Decl. (a)). This claim is incorrect. The claim form that Lead Counsel submitted during preliminary approval proceedings was eleven pages in length. See Docket No. - (proof of claim). The claim form that was sent out by GCG was actually shorter nine pages. See Docket No. - (proof of claim). Moreover, as noted above in, GCG contemplated that the notice packet i.e., the long-form notice plus proof of claim would total sixteen pages. It appears that the notice packet that GCG sent out was only one page longer (i.e., seventeen pages). See Docket No. - (notice packet). 0 GCG sent out a reminder postcard. While a reminder postcard may not have been within the original estimate that GCG gave Lead Counsel, the Court specifically asked the parties about the cost of a reminder postcard during preliminary approval proceedings. Lead Plaintiff responded that a reminder notice to approximately 0,000 class members would increase claim administration costs by approximately $,000 to $,000. Docket No. (Supp. Br. at ). Including the cost of reminder notice, the maximum estimate for claims administration was $,000. See, supra. (Notably, the cost of the reminder notice was estimated to be $,000 to $,000 if notice were sent out to 0,000 class members. As it turns out, only, reminder postcards were sent out. See, infra. Thus, if anything, the cost of the reminder notice should have been markedly less than $,000 to $,000.) The publication of the summary notice in Investor s Business Daily. Publication notice was, admittedly, not explicitly identified as one of the key assumptions made by GCG above. See, supra. However, there is no doubt that publication notice was always contemplated by Lead Plaintiff as of the time of preliminary approval. See,

4 Case :-cv-00-emc Document Filed 0// Page of supra. No indication was ever given to the Court that the cost of claims administration did not include the touted publication notice.. In light of the above, the Court stated at the hearing on the pending motion that it was not inclined to award $,0. in claims administration costs and that instead it would award $,000 unless GCG provided a better explanation in support of the requested amount.. On March, 0, GCG provided a new declaration in which it defended the $,0. figure because of: Significantly more broker outreach than anticipated ; Bigger Proof of Claim Form including increased cost of printing and postage ; Reminder postcard, including printing and postage ; Publication ; and 0 Significantly more class member communications. Cirami Decl... The only new matters identified in the new declaration are [s]ignificantly more broker outreach than anticipated and [s]ignificantly more class member communications. Cirami Decl.. The assertions are too conclusory to support the $,0. figure. For example, GCG has failed to explain how broker outreach was significantly more than anticipated given that its original estimate was that 0,000 notice packets would be distributed. Similarly, GCG has failed to explain how class member communications were significantly more than anticipated given its original estimate of an IVR telephone line for,000 minutes of operation (assuming % of class members at minutes/call); claims processing at 0% response rate (,000 claims); and a -month claims administration process. Docket No. (Supp. Br. at ).. For the foregoing reasons, the Court could well stand by its original ruling that claims administration costs of no more than $,000 would be awarded. However, it shall increase that figure slightly to $,000 to account for possible underestimation of costs. The Court reiterates that, at the time of preliminary approval, the maximum cost was $,000, and that was based on assumptions that were inflated (e.g., a reminder postcard to 0,000 recipients). /// ///

5 Case :-cv-00-emc Document Filed 0// Page of For the foregoing reasons, the Court now gives final approval to Lead Plaintiff s motion but modifies its proposed order at Docket No. -. A modified order reflecting the Court s rulings herein shall be filed shortly hereafter. This order disposes of Docket No.. IT IS SO ORDERED. Dated: March, 0 0 EDWARD M. CHEN United States District Judge